DCIT CEN CIR 1, THANE v. NEEL SIDHI ENTERPRISES, NAVI MUMBAI

ITA 1762/MUM/2010 | 2006-2007
Pronouncement Date: 30-03-2012 | Result: Dismissed

Appeal Details

RSA Number 176219914 RSA 2010
Assessee PAN AAEFN5410H
Bench Mumbai
Appeal Number ITA 1762/MUM/2010
Duration Of Justice 2 year(s) 25 day(s)
Appellant DCIT CEN CIR 1, THANE
Respondent NEEL SIDHI ENTERPRISES, NAVI MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 30-03-2012
Date Of Final Hearing 13-02-2012
Next Hearing Date 13-02-2012
Assessment Year 2006-2007
Appeal Filed On 05-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI BEFORE SHIRI G. E. VEERABHADRAPPA HONBLE PRESIDEN T AND SHRI AMIT SHUKLA JUDICIAL MEMBER ITA NO. : 1761 1762 & 1763/MUM/2010 ASSESSMENT YEAR : 2005-06 2006-07 & 2007-08 THEY DY. COM MISSIONER OF INCOME-TAX CENTRAL CIRCLE-1 PAWAR INDUSTRIAL ESTATE 2 ND FLOOR EDULJI ROAD CHARAI THANE (W) VS. M/S. NEEL SIDHI ENTERPRISES 2 ND FLOOR THE EMERALD PLOT NO.195-B SECTOR-12 VASHI NAVI MUMBAI PAN NO: AAEFN 5410 H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PRAVIN VARMA RESPONDENT BY : SHRI SUNIL PATHAK & SHRI SUBODH RATNANARKHI DATE OF HEARING : 06 .0 3 .2012 DATE OF PRONOUNCEMENT : 30 .03.2012 ORDER PER AMIT SHUKLA (J.M.) : THE AFORESAID APPEALS HAVE BEEN FILED BY THE DEPAR TMENT AGAINST ORDER DATED 30.10.2009 PASSED BY THE LEARNED CIT(AP PEALS)-I THANE PASSED SEPARATELY FOR THE ASSESSMENT YEARS 2005-06 2006-07 AND 2007- 08 FOR THE QUANTUM OF ASSESSMENT DETERMINED U/S.153 A R.W.S 143(3). SINCE THE ISSUES INVOLVED IN ALL THE THREE APPEALS ARE SIMILAR HENCE THE SAME ARE DISPOSED OFF BY THE COMMON ORDER. ITA NOS : 1761 1762 & 1763/MUM/2010 M/S.N EEL SIDHI ENTERPRISES 2 2. THE ONLY ISSUE INVOLVED IN ALL THESE APPEALS IS WITH REGARD TO THE DISALLOWANCE OF CLAIM OF DEDUCTION U/S.80IB(10). S INCE THE GROUNDS OF APPEALS ARE COMMON IN ALL THE YEARS HOWEVER FOR TH E SAKE OF READY REFERENCE THE GROUNDS OF APPEALS AS RAISED BY THE DEPARTMENT IN THE ASSESSMENT YEAR 2005-06 ARE REPRODUCED HERE IN BELO W:- 1. THE LD. CIT(A) HAS ERRED IN ALLOWING DEDUCTION U/S.80IB(10) TO THE TUNE OF `. 2 37 29 264/-. 2. THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ASS ESSEE IS ELIGIBLE FOR DEDUCTION U/S.80IB(10) OF THE ACT WITH OUT APPRECIATING THAT THE PROJECT CONSISTS OF COMMERCIA L UNITS. 3. THE DECISION OF HON'BLE SPL. BENCH ITAT PUNE IN THE CASE OF BRHAMHA ASSOCIATES V/S. JOINT COMMISSIONER OF INCOME TAX (2009) (122 TTJ (PUNE) (SB) 433) IS APP LICABLE ONLY FOR A.Y. 2004-05 AND EARLIER YEAR AND NOT FOR A.Y. 2005- 06 OR SUBSEQUENT YEAR. HOWEVER CIT(A) BASED ON THI S DECISION ALLOWED RELIEF IN ASSESSEE FAVOUR FOR A.Y . 2005-06. 4. THE ORDER OF THE CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE APPELLA NT IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF DEVELOPING HOUSING PROJECTS. A SEARCH AND SEIZURE ACTION U/S.132 WAS CARRIED OUT ON 04.10 .2006 AT THE BUSINESS PREMISES AND IN CONSEQUENT TO THAT A NOTI CE U/S.153A WAS SENT TO THE APPELLANT FOR FILING OF RETURN OF INCOM E FOR ALL THE YEARS INVOLVED HERE IN THESE APPEALS. FOR THE ASSESSMENT YEAR 2005-06 THE RETURN OF INCOME WAS FILED ON A TOTAL INCOME OF `. 87 92 450/- AFTER CLAIMING A DEDUCTION OF `. 2 37 29 264/- U/S.80IB(10) OF THE ACT. DURING THE YEAR THE ASSESSEE FIRM HAS DEVELOPED THREE PRO JECTS NAMELY NEEL SIDDHI TOWER AND NEEL SIDDHI SPLENDOUR AND NEEL SIDDHI RESIDENCY. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S. 153(A) R.W.S 143(3) ON 31.12.2008 ON A TOTAL INCOME OF `. 3 25 21 720/- AFTER DISALLOWING THE ITA NOS : 1761 1762 & 1763/MUM/2010 M/S.N EEL SIDHI ENTERPRISES 3 DEDUCTION OF CLAIM MADE U/S.80IB(10) IN RESPECT OF THE PROJECT NEEL SIDDHI SPLENDOUR. 3.1 THE APPELLANT WAS ALLOTTED A PLOT OF LAND ADMEA SURING 7770 SQ. MTRS FROM CIDCO LTD. AT VASHI MUMBAI FOR THE PURPO SE OF DEVELOPING RESIDENTIAL AND COMMERCIAL UNITS. OUT OF THIS PORT ION A PLOT ADMEASURING 777 SQ. MTRS (I.E. 10%) WHICH WAS MEANT EXCLUSIVELY FOR COMMERCIAL UNIT WAS SOLD TO AN ANOTHER FIRM M/S. T HAKKAR ENTERPRISES. THE ORIGINAL PROJECT WAS APPROVED AS RESIDENTIAL-CU M-COMMERCIAL PROJECT HOWEVER THE DEVELOPMENT RIGHTS IN RESPECT OF COMMER CIAL UNIT I.E. 777 SQ. MTRS. WAS SOLD OFF TO THE AFORESAID CONCERN. THE A SSESSING OFFICER CAME TO THE CONCLUSION THAT THE ASSESSEE HAS DELIBERATEL Y SOLD OFF THIS PIECE OF PLOT TO ENTITLED ITSELF TO THE BENEFITS OF DEDUCTIO N U/S.80IB(10). IN RESPONSE TO THE SHOW CAUSE NOTICE THE ASSESSEE SUB MITTED THAT AS PER THE REQUIREMENT OF LOCAL AUTHORITY I.E. NAVI MUMBAI MUNICIPAL CORPORATION (NMMC) 10% OF THE TOTAL AREA OF 777 SQ . MTR WAS COMPULSORY REQUIRED TO BE DEVELOPED AS COMMERCIAL A REA. ACCORDINGLY THE DEVELOPMENT RIGHTS IN RESPECT OF THE 777 SQ. MT R I.E. EXACTLY 10% WAS SOLD OFF TO M/S. THAKKAR ENTERPRISES THROUGH AN A GREEMENT FOR A CONSIDERATION OF `. 1 90 36 500/-. THE SAID SALE CONSIDERATION WAS A REALIZED AT THE MARKET RATE AND THE SALE PROCEEDS H AVE BEEN DULY SHOWN AS INCOME IN THE INCOME TAX RETURN FILED FOR THE ASSESSMENT YEAR 2004- 05. THE SAME HAS BEEN ACCEPTED ALSO IN THE SCRUTIN Y ASSESSMENT COMPLETED U/S.143(3). 3.2 THE ASSESSING OFFICER REJECTED THE EXPLANATION OF THE APPELLANT ON THE GROUND THAT THE PROJECT HAD BEEN APPROVED AS CO MMERCIAL-CUM- RESIDENTIAL PROJECT HAVING TOTAL CONSTRUCTED AREA O F 1162.8 SQ. MTR INCLUDING 1165 SQ. MTR OF COMMERCIAL AREA. HE HELD THAT BOTH CONSTITUTED ONE SINGLE AND INTEGRATED PROJECT. THE COMMERCIAL AREA ALSO ITA NOS : 1761 1762 & 1763/MUM/2010 M/S.N EEL SIDHI ENTERPRISES 4 SLIGHTLY EXCEEDED BY 10% AND THEREFORE THE ASSESS EE FAILED TO FULFIL THE CONDITIONS LAID DOWN U/S.80IB(10). FOR COMING TO T HIS CONCLUSION HE RELIED UPON THE DECISION PASSED IN THE CASE OF M/S. LAUKIK DEVELOPERS VS. DCIT PASSED BY ITAT MUMBAI. 4. BEFORE THE CIT(APPEALS) THE CONTENTION OF THE A SSESSEE REMAINED SAME THAT AFTER THE PROCESS OF ACQUISITION WAS COMP LETED FROM CIDCO LTD. IT ENTERED INTO A NEGOTIATION WITH M/S. THAK KAR ENTERPRISES FOR TRANSFERRING THE DEVELOPMENT RIGHTS IN RESPECT OF T HE PORTION OF PLOT AREA ON WHICH COMPULSORY COMMERCIAL AREA WAS REQUIRED TO BE DEVELOPED AS PER THE REGULATION OF LOCAL AUTHORITY AND NMMC. AC CORDINGLY THE PORTION OF THE PLOT ON WHICH COMMERCIAL COMPONENT WAS REQUI RED TO BE DEVELOPED AS PER THE REQUIREMENTS OF LOCAL AUTHORITY WAS TRA NSFERRED TO DIFFERENT PARTY UNDER MOU DATED 06.09.2002. THUS THE ASSESSEE DIVESTED ITSELF FROMTHE DEVELOPMENT RIGHTS IN RESPECT OF 777 SQ. MT RS OF COMMERCIAL PLOT AND THEREFORE THE BALANCE AREA WAS WHOLLY AND EXC LUSIVELY A HOUSING PROJECT. IT WAS ALSO CONTENTED THAT THE MARKET VAL UE IN WHICH THE DEVELOPMENT RIGHTS WAS TRANSFERRED HAS BEEN ACCEPTE D U/S.143(3) IN THE ASSESSMENT YEAR 2004-05 AND THEREFORE SAME CANNOT BE ROPED IN THIS YEAR FOR TAKING ANY ADVERSE INFERENCE. THUS WHAT T HE ASSESSEE FIRM HAS DEVELOPED IS EXCLUSIVELY A RESIDENTIAL HOUSING PROJ ECT ON THE BALANCE PLOT OF 6993 SQ. MTRS RETAINED BY IT AND THEREFORE IT WAS FULLY ELIGIBLE FOR DEDUCTION U/S.80IB(10). IT WAS ALSO BROUGHT TO THE NOTICE OF THE CIT(APPEALS) THROUGH THE RECORDS THAT THE ASSESSEE HAD COMPLETED THE HOUSING PROJECT PRIOR TO THE COMMERCIAL BUILDING CO MPLETED BY M/S. THAKKAR ENTERPRISES AND OCCUPANCY CERTIFICATE DATE D 29.06.2005 WAS ISSUED BY NAVI MUMBAI MUNICIPAL CORPORATION. THE T OTAL BUILT UP AREA OF THE PLOT WITH BREAK UP OF THE AREAS CONSUMED FOR RE SIDENTIAL BUILDING DEVELOPED BY THE ASSESSEE FIRM AND THE COMMERCIAL B UILDING DEVELOPED BY M/S. THAKKAR ENTERPRISES WAS AS UNDER :- ITA NOS : 1761 1762 & 1763/MUM/2010 M/S.N EEL SIDHI ENTERPRISES 5 AREA STATEMENT OF BUILDINGS DEVELOPED ON PLOT NO.195/SECTOR 12 VASHI NAVI MUMBAI TOTAL BUILT UP AREA AS PER PLAN 11645.89 SQ. MTRS. TOTAL BUILT UP AREA OF RESIDENTIAL BUILDING NEEL SIDHI TOWERS DEVELOPED BY THE APPELLANT FIRM 10480.33 SQ. MTRS. TOTAL BUILT UP AREA OF COMMERCIAL BUILDING DEVELOPED BY M/S. THAKKAR ENTERPRISES 1165.496 SQ. MTRS. 4.1 ON THIS BASIS IT WAS CONTENTED THAT THE FINDIN G OF THE ASSESSING OFFICER THAT THE ENTIRE DEVELOPMENT OF 777 SQ. MTRS NEEDS TO BE CONSIDERED AS ONE PROJECT IS NOT CORRECT. FOR THE PROPOSITION THAT WHETHER ONE PLOT OF LAND HAVING COMMON LAY OUT CAN HAVE TWO DISTINCT AND INDEPENDENT PROJECT RELIANCE WAS PLACED ON THE DECISION OF ITAT MUMBAI BENCH IN THE CASE OF SAROJ SALES ORGANISATION VS. ITO REPORTED IN 3 DTR (MUM) 494 . FINALLY RELIANCE WAS PLACED ON THE SPECIAL BENCH DECISION OF ITAT PUNE BENCH IN THE CA SE OF BRAHMA ASSOCIATES & OTHERS VS. JCIT PUNE REPORTED IN 119 ITD 255 (SB) PUNE IN SUPPORT OF THE CONTENTION THAT EVEN IF THE COMM ERCIAL UNITS AND THE HOUSING UNIT ARE TAKEN AS ONE PROJECT THEN ALS O IT HAS TO BE TREATED AS A HOUSING PROJECT AND DEDUCTION U/S.80IB(10) IS ADMISSIBLE. VARIOUS OTHER DECISIONS WERE CITED IN SUPPORT OF THE ABOVE CONTENTIONS WHICH HAS BEEN DEALT BY THE CIT(APPEALS) FROM PAGES 11 TO 18 OF THE APPELLATE ORDER WHICH NEED NOT TO BE REITERATED. AFTER CONSIDERING THE ENTIRE FACTS AND THE JUDGMENTS RELIED UPON BY THE APPELLANT THE CIT (APPEALS) HELD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.80IB(10) AFTER OBSERVING AND HOLDING AS UNDER:- 4.9 IN VIEW OF THE ABOVE DISCUSSION AND DECISIONS IN THE CASES LIKE BRAHMA ASSOCIATES SAROJ SALES ORGANISAT ION AND OTHERS WHICH ARE SQUARELY APPLICABLE TO THE CASE OF THE APPELLANT THE PROJECT WHERE COMMERCIAL SPACE HAS B EEN CONSTRUCTED BY M/S. THAKKAR ENTERPRISES IS NOT A PA RT OF THE ITA NOS : 1761 1762 & 1763/MUM/2010 M/S.N EEL SIDHI ENTERPRISES 6 PROJECT OF THE APPELLANT AND HENCE I AM CONVINCED THAT THE APPELLANT HAS FULFILLED THE CONDITIONS LAID DOWN BY SEC 80IB(10) OF THE ACT. THE DECISIONS RENDERED IN THE CASES OF BRAHMA ASSOCIATES AND SAROJ SALES ORGANISATION ARE BINDING ON ME IN VIEW OF THE DECISIONS OF MUMBAI HIGH COURT IN THE CASE OF BANK OF BARODA VS. H.C. SRIVASTAVA (256 ITR 385) AND THE DECISIONS OF THE HON'BLE MADHYA PRADESH HIGH CO URT IN THE CASES OF GOVINDRAM SEKSARIA CHARITY TRUST VS. I TO (168 ITR 387) AND AGARWAL WAREHOUSING AND LEASING LTD. ( 257 ITR 235/240). ACCORDINGLY I HOLD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S. 80IB (10) IN FULL. I DIRECT THE AO T O DELETE THE ADDITION MADE ON ACCOUNT OF DENIAL OF CLAIM OF DEDU CTION U/S.80IB(10). 5. THE LEARNED CIT DR SUBMITTED THAT THE PROJECT H AS BEEN APPROVED AS HOUSING CUM COMMERCIAL COMPLEX AND WAS ALLOTTED TO THE ASSESSEE FIRM ONLY THEREFORE SEGREGATION OF PART OF THE SA ME WHICH HAS BEEN SOLD TO OTHER CONCERN WILL NOT RENDER PROJECT AS A HOUSI NG PROJECT. IF THE ENTIRE AREA I.E. 7770 SQ. MTRS IS CONSIDERED (INCLUDING 77 7 SQ MTRS SOLD TO THE OTHER FOR COMMERCIAL DEVELOPMENT) THEN PER UNIT AR EA WOULD BE MORE THAN 2000 SQ. FT. AND THEREFORE DEDUCTION U/S.80I B(10) WILL NOT BE AVAILABLE. HE TOOK US TO THE VARIOUS DOCUMENTS LIK E MOU DATED 04.09.2002 WITH M/S. THAKKER ENTERPRISES ALLOTMEN T LETTER DATED 09.09.2002 BY CIDCO LTD. AND COMMENCEMENT CERTIFICA TE DATED 29.07.2003 TO POINT OUT THAT THE ASSESSEE ITSELF IS RESPONSIBLE FOR DEVELOPING THE COMMERCIAL UNIT AND M/S. THAKKER ENT ERPRISES WAS A KIND OF CO-DEVELOPER ALONG WITH THE ASSESSEE. HE R EITERATED THE FINDINGS OF THE ASSESSING OFFICER THAT IF THE ENTIRE AREA O F 777 SQ. MTRS IS TAKEN INTO CONSIDERATION IT EXCEEDS THE AREA OF 2000 SQ. FT. PER UNIT AND THEREFORE IT CANNOT BE HELD TO BE ENTITLED FOR EXE MPTION U/S.80IB(10). WITH REGARD TO THE JUDGEMENT OF HON'BLE SPECIAL BENCH OF THE TR IBUNAL IN THE CASE OF BRAHMA ASSOCIATES & OTHERS (SUPRA) WHICH HAS BEEN CONFIRMED ALSO BY THE HON'BL E JURISDICTIONAL HIGH COURT HE CONTENTED THAT THE SA ID JUDGMENTS WILL NOT ITA NOS : 1761 1762 & 1763/MUM/2010 M/S.N EEL SIDHI ENTERPRISES 7 BE APPLICABLE FROM THE ASSESSMENT YEAR 2005-06 AS S ECTION 80IB(10)(D) HAS BEEN AMENDED W.E.F. 01.04.2005. 6. ON THE OTHER HAND THE LEARNED AR ON BEHALF OF T HE ASSESSEE RELIED UPON THE FINDINGS OF THE CIT(APPEALS) AND SUBMITTED THAT THERE WAS A PROPER AGREEMENT WITH M/S. THAKKER ENTERPRISES W HEREIN DEVELOPMENTS RIGHTS WERE SOLD TO THEM FOR DEVELOPIN G COMMERCIAL UNITS FOR THE PLOTS ADMEASURING 777 SQ. MTRS WHICH WAS 10 % OF THE TOTAL AREA WHICH WAS REQUIRED TO BE DEVELOPED BY THE ASSESSEE FIRM. THE SAID AGREEMENT AND SALE CONSIDERATION IN THE FORM OF DEV ELOPMENT RIGHTS HAS BEEN ACCEPTED AND TAXED IN THE ASSESSMENT YEAR 2004 -05 WHICH CANNOT BE DISPUTED IN THIS YEAR. HE FURTHER RELIED UPON T HE VARIOUS CASE LAWS AND THE ITAT DECISIONS FOR WHICH SEPARATE COMPLICAT ION HAS BEEN FILED. BASED ON THESE DECISIONS HE CONTENTED THAT FIRSTLY EVEN IF THE HOUSING PROJECT CONTAINS DEVELOPMENT OF COMMERCIAL AREA OR UNIT THEN ALSO THE APPELLANT IS ENTITLED FOR EXEMPTION U/S 80IB(10) AN D SECONDLY THE AMENDMENT WHICH HAS COME FROM 01.04.2005 WILL NOT B E APPLICABLE IN THE CASE OF THE APPELLANT SINCE THE PROJECT HAD CO MMENCED MUCH BEFORE THAT WHICH IS EVIDENT FROM THE COMMENCEMENT CERTIF ICATE DATED 29.07.2003. LASTLY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. BRAHMA ASSOCIATES REPORTED IN (2011) 333 ITR 28 9 HAS CATEGORICALLY HELD THAT THE HOUSING PROJECT APPROVE D BY THE LOCAL AUTHORITY WHICH ALSO CONTAINS PARTLY COMMERCIAL USE R ALSO HAS BEEN HELD TO BE ELIGIBLE FOR DEDUCTION U/S.80IB(10). 7. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE C IT(APPEALS) AND THE ASSESSING OFFICER AND ALSO THE RIVAL CONTENTION S OF THE PARTIES. THE UNDISPUTED FACT IS THAT THE ASSESSEE WAS ALLOTTED A PLOT OF LAND ADMEASURING 7770 SQ. MTRS FROM CIDCO LTD. TO DEVELO P A RESIDENTIAL AND COMMERCIAL COMPLEX OUT OF WHICH THE COMPONENT FOR COMMERCIAL ITA NOS : 1761 1762 & 1763/MUM/2010 M/S.N EEL SIDHI ENTERPRISES 8 COMPLEX WAS 10% OF THE ALLOTTED LAND. THE ASSESSEE HAS SOLD THE DEVELOPMENT RIGHTS OF THIS COMMERCIAL UNIT TO M/S. THAKKER ENTERPRISES AT A PORTION OF PLOT ADMEASURING 777 SQ. MTRS WHIC H IS 10% OF THE TOTAL PLOT OF LAND. NOW THE ISSUE BEFORE US IS WHETHER THE PLOT AREA OF 777 SQ. MTRS. FOR COMMERCIAL UNIT SOLD TO THE OTHER PARTY I .E. M/S. THAKKER ENTERPRISES SHOULD BE SEGREGATED FROM THE OVERALL PLOT SO THAT THE BALANCE AREA REMAINED WITH THE ASSESSEE FOR THE DEV ELOPMENT OF RESIDENTIAL UNITS IS PURELY A HOUSING PROJECT AND C ONSEQUENTLY THE AREA PER UNIT WOULD BE LESS THAN 1500 SQ. FTS. THE SECO ND ISSUE IS THAT IF THE ENTIRE PLOT ALLOTTED TO THE ASSESSEE I.E. 7770 SQ. MTRS. (WHICH INCLUDES 777 SQ. MTRS FOR DEVELOPMENT OF COMMERCIAL UNIT) IS TREATED AS ONE INTEGRATED PROJECT SOLELY WITH THE ASSESSEE THEN TH E RESIDENTIAL BLOCK AND COMMERCIAL BLOCK CAN BE SEGREGATED SO AS TO WORK O UT THE CLAIM FOR DEDUCTION U/S.80IB(10) OR COMPLETELY DENY THE DEDUC TION AT ALL TO THE ASSESSEE. THE LAST ISSUE IS THAT WHETHER THE HOUSI NG PROJECT CAN INCLUDE RESIDENTIAL CUM COMMERCIAL DEVELOPMENT WITHIN THE A MBIT OF SECTION 80IB(10(D). 7.1 FROM THE RECORDS AND THE FINDINGS GIVEN BY THE CIT(APPEALS) IT IS AMPLY CLEAR THAT THE PLOT ADMEASURING 777 SQ. MTRS. WAS SOLD TO AN ANOTHER CONCERN M/S. THAKKER ENTERPRISES WHEREI N THE DEVELOPMENT RIGHTS WERE GIVEN TO BUILT COMMERCIAL UNITS AS WAS REQUIRED TO BE DONE BY THE ASSESSEE IN TERMS OF ALLOTMENT GIVEN BY CIDCO L TD. ONCE THE ASSESSEE HAS TRANSFERRED THE DEVELOPMENT RIGHT TO A DIFFERENT CONCERN ON A SALE CONSIDERATION OF `. 1 90 36 500/- AND SAME HAS BEEN OFFERED FOR TAX IN THE ASSESSMENT YEAR 2004-05 WE HAVE NO HESITATI ON IN HOLDING THAT THE SAID AREA OF 777 SQ. MTRS. HAS TO BE SEGREGATED FROM THE ENTIRE PLOT AREA OF 7770 SQ. MTRS FOR THE PURPOSE OF DEDUCTION U/S.80IB(10). FIRSTLY NO CLAIM FOR DEDUCTION HAS BEEN MADE BY THE ASSESSE E ON THE INCOME FROM THIS COMMERCIAL UNIT AND SECONDLY IT HAS ALRE ADY BEEN TAXED. ONCE ITA NOS : 1761 1762 & 1763/MUM/2010 M/S.N EEL SIDHI ENTERPRISES 9 THE SAID COMMERCIAL UNIT WHICH WAS TO BE DEVELOPED BY M/S. THAKKER ENTERPRISES IS SEGREGATED THEN THE BALANCE AREA LEFT FOR THE DEVELOPMENT IS PURELY A RESIDENTIAL UNIT THEREFORE THE ASSESS EE WOULD BE FULLY ENTITLED FOR CLAIMING DEDUCTION U/S.80IB(10) ON THE PROFITS DERIVED FROM SALE OF SUCH RESIDENTIAL UNITS. ONCE AGAIN IF THIS FACT HA S BEEN ACCEPTED THEN THERE WOULD BE NO DISPUTE THAT THE PER UNIT AREA I N THE PROJECT WILL BE LESS THAN 1500 SQ. FT AND THEREFORE THE CONDITION S OF SECTION 80IB(10)(C) GETS FULFILLED. ON THIS ISSUE THE DECISION OF ITA T MUMBAI BENCH IN THE CASE OF SAROJ SALES ORGANISATION VS. ITO (SUPRA) WOULD BE FULLY APPLICABLE IN THE CASE OF THE APPELLANT WHEREIN IT HAS BEEN HELD THAT IF BOTH ELIGIBLE AND INELIGIBLE UNITS ARE CONSTRUCTED UNDER SINGLE SANCTION PLAN THEN THE INDEPENDENT UNITS OR BLOCKS WHICH AR E LESS THAN ELIGIBLE CRITERIA OF 1000 SQ. FT. (HERE IN THIS CASE 1500 SQ . FT.) THEN THE OTHER INELIGIBLE UNITS/BLOCKS CANNOT BE INCLUDED FOR THE PURPOSE OF DENYING THE STATUTORY RELIEF TO WHICH THE ASSESSEE IS ENTITLED FOR. THIS IS ALSO SUPPORTED BY ANOTHER DECISION OF ITAT MUMBAI BENCH IN THE CASE OF VANDANA PROPERTIES VS. ACIT REPORTED IN (2010) 128 TTJ (MUM) 89 WHEREIN IT WAS HELD THAT THE CONCEPT OF HOUSING PRO JECT DOES NOT MEAN THAT THERE SHOULD BE A GROUP OF BUILDING AND ONLY T HEN THE SAME WOULD BE CALLED AS HOUSING PROJECT AND IF THE PROJECT C ONTAINS INDEPENDENT BUILDING THEN EACH UNIT IN THE SAID BUILDING HAS T O BE TAKEN INDEPENDENTLY. THUS FOLLOWING THE RATIO OF ABOVE D ECISIONS WE HOLD THAT THE RESIDENTIAL UNIT AS HAS BEEN DEVELOPED BY THE A SSESSEE IS LESS THAN 1500 SQ.MTR AS IT WILL NOT INCLUDE THE AREA EMBEDD ED FOR COMMERCIAL UNIT IN THE WHOLE OF THE PROJECT. 7.2 AS REGARDS WHETHER THE HOUSING PROJECT WHICH H AS BEEN APPROVED BY THE LOCAL AUTHORITY AS RESIDENTIAL CUM COMMERCI AL PROJECT WOULD BE ENTITLED FOR DEDUCTION U/S.80IB(10). THIS ISSUE HA S NOW BEEN SETTLED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE O F CIT VS. BRAHMA ITA NOS : 1761 1762 & 1763/MUM/2010 M/S.N EEL SIDHI ENTERPRISES 10 ASSOCIATES & OTHERS VS. JCIT (SUPRA) WHEREIN THE DECISION OF SPECIAL BENCH HAS BEEN APPROVED PARTLY AFTER OBSERVING AND HOLDING AS UNDER :- 30. IN THE RESULT THE QUESTIONS RAISED IN THE APP EAL ARE ANSWERED THUS : (A) UP TO MARCH 31 2005 (SUBJECT TO FULFILLING OTH ER CONDITIONS) DEDUCTION UNDER SECTION 80-IB(10) IS ALLOWABLE TO H OUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY HAVING RE SIDENTIAL UNITS WITH COMMERCIAL USER TO THE EXTENT PERMITTED UNDER THE DEVELOPMENT CONTROL RULES/ REGULATIONS FRAMED BY TH E RESPECTIVE LOCAL AUTHORITY. (B) IN SUCH A CASE WHERE THE COMMERCIAL USER PERMI TTED BY THE LOCAL AUTHORITY IS WITHIN THE LIMITS PRESCRIBED UN DER THE DEVELOPMENT CONTROL RULES/REGULATION THE DEDUCTIO N UNDER SECTION 80-IB(10) UP TO MARCH 31 2005 WOULD BE AL LOWABLE IRRESPECTIVE OF THE FACT THAT THE PROJECT IS APPROV ED AS 'HOUSING PROJECT' OR 'RESIDENTIAL PLUS COMMERCIAL'. (C) IN THE ABSENCE OF ANY PROVISIONS UNDER THE INCO ME-TAX ACT THE TRIBUNAL WAS NOT JUSTIFIED IN HOLDING THAT UP TO MARCH 31 2005 DEDUCTION UNDER SECTION 80-IB(10) WOULD BE AL LOWABLE TO PROJECTS APPROVED BY THE LOCAL AUTHORITY HAVING RESIDENTIAL BUILDING WITH COMMERCIAL USER UP TO 10 PER CENT. O F THE TOTAL BUILT-UP AREA OF THE PLOT. (D) SINCE THE DEDUCTION UNDER SECTION 80-IB(10) IS ON THE PROFITS DERIVED FROM THE HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY AS A WHOLE THE TRIBUNAL WAS NOT J USTIFIED IN RESTRICTING THE SECTION 80-IB(10) DEDUCTION ONLY T O A PART OF THE PROJECT. HOWEVER IN THE PRESENT CASE SINCE THE A SSESSEE HAS ACCEPTED THE DECISION OF THE TRIBUNAL IN ALLOWING S ECTION 80- IB(10) DEDUCTION TO A PART OF THE PROJECT WE DO NO T DISTURB THE FINDINGS OF THE TRIBUNAL IN THAT BEHALF. (E) CLAUSE (D) INSERTED TO SECTION 80-IB(10) WITH E FFECT FROM APRIL 1 2005 IS PROSPECTIVE AND NOT RETROSPECTIVE AND HENCE CANNOT BE APPLIED FOR THE PERIOD PRIOR TO APRIL 1 2005. ITA NOS : 1761 1762 & 1763/MUM/2010 M/S.N EEL SIDHI ENTERPRISES 11 7.3 IN THE PRESENT CASE IT IS UNDISPUTED THAT THE P ROJECT HAD STARTED MUCH BEFORE 01.04.2005 WHICH IS EVIDENT FROM THE A LLOTMENT LETTER DATED 09.09.2002 AND COMMENCEMENT CERTIFICATE DATED 29.07 .2003. THUS ONCE THE PROJECT HAS BEEN STARTED PRIOR TO 01.04.20 05 THE AMENDMENT BROUGHT U/S.80IB(10)(D) FROM 01.04.2005 WILL NOT BE APPLICABLE AND THE JUDGMENT OF HON'BLE HIGH COURT IN THE AFORESAID CAS E WOULD BECOME SQUARELY APPLICABLE. 7.4 FURTHER THE APPLICABILITY OF AMENDMENT W.E.F 01 .04.2005 ON THE PROJECTS WHICH HAD COMMENCED PRIOR TO THE DATE OF AMENDMENT HAS BEEN DEALT BY THE ITAT MUMBAI BENCH IN SEVERAL DECI SIONS VIZ : I) SAROJ SALES ORGANISATION VS. ITO REPORTED IN (2 008) 115 TTJ 485 WHEREIN IT HAS BEEN HELD AS UNDER :- AS REGARDS THE OBJECTION OF THE AO THAT THE PERMI SSIBLE SHOPPING AREA OF HOUSING PROJECT EXCEEDS 5 PER CENT THE ASSESSEE IS NOT ENTITLED FOR RELIEF UNDER S.80IB(10 ). WE ARE OF THE VIEW THAT THE HOUSING PROJECT WERE APPRO VED BEFORE 31 ST MARCH 2005 AND FOR SUCH PROJECT WHICH WERE SO APPROVED THERE WAS NO STIPULATION AS TO TH E SHOPPING COMPLEX AREA IS PERMISSIBLE IN THE PROJECT . AS ALREADY STATED EARLIER THAT THE AMENDMENTS WERE SUBSEQUENTLY MADE WHILE EXTENDING THE DEDUCTION OF INCOME FROM HOUSING PROJECT APPROVED UPTO 31 ST MARCH 2007 THE DENIAL OF DEDUCTION IN OUR VIEW IS CLEA RLY NOT IN ACCORDANCE WITH LAW. II) HIRANANDANI AKRUTI JV VS. DCIT REPORTED IN (201 0) 39 SOT 498 (MUMBAI) WHEREIN IT HAS BEEN HELD AS UNDER :- WE ARE OF THE VIEW THAT WE ARE NOT SUPPLYING ANY WORDS TO THE STATUE BUT ARE ONLY HOLDING THAT THE LAW AS IT EXISTED IN THE ASST. YR 2004-05 WHEN THE ASS ESSE SUBMITTED ITS PROPOSAL FOR SLUM REHABILITATION AND THE PERMISSION FOR CARRYING OUT THE DEVELOPMENT WAS ACCORDED ON 17 TH NOVE 2003 AND WHEN THE ASSESSEE ITA NOS : 1761 1762 & 1763/MUM/2010 M/S.N EEL SIDHI ENTERPRISES 12 COMMENCED DEVELOPMENT IS TO BE APPLIED. THEREFORE THE SUBMISSIONS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE IN THIS REGARD CANNOT BE ACCEPTED. WE ARE OF THE VIEW THAT THE LEGISLATURE WOULD NOT HAVE INTENDED TO TAKE AWAY A VESTED RIGHT WITHOUT CLEAR WORDS TO THAT EFFECT IN THE PROVISIONS OF S. 80IB(1 0) AS AMENDED BY THE FINANCE ACT 2005 W.E.F. 1 ST APRIL 2005. WE THEREFORE HOLD FOLLOWING THE DECISION I N THE CASE OF SAROJ ORGANISATION (SUPRA) THAT THE LAW AS IT EXISTED IN THE ASST. YR. 2004-05 WHEN THE ASSESSEE SUBMITTED ITS PROPOSAL FOR SLUM REHABILITATION AND THE PERMISSION FOR CARRYING OUT THE DEVELOPMENT WAS ACCORDED ON 17 TH NOV. 2003 AND WHEN THE ASSESSEE COMMENCED DEVELOPMENT IS TO BE APPLIED. 7.5 THE AFORESAID DECISIONS HAVE ALSO BEEN FOLLOWED IN BHUMIRAJ HOMES LIMITED VS. DCIT IN ITA NO.506/MUM/2009. IN VIEW OF THESE DECISIONS THE CONTENTION OF THE LEARNED CIT(DR) TH AT THE BENEFIT OF 80IB(10)(D) AS STOOD PRIOR TO 01.04.2005 WILL NOT B E APPLICABLE FROM THE ASSESSMENT YEAR 2005-06 ONWARDS DOES NOT HOLD ANY GROUND. 7.6 IN VIEW OF THE FINDINGS GIVEN ABOVE THERE IS N O MERIT IN THE APPEAL FILED BY THE DEPARTMENT AND HENCE WE DISMISS THE SA ME. 8. THE APPEALS FOR THE A.Y. 2006-07 AND A.Y. 2007-0 8 BEING ITA NO.1762/MUM/2010 & 1763/MUM/2010 RESPECTIVELY ARE EXACTLY SIMILAR TO THE AFORESAID APPEALS FOR THE A.Y. 2005- 06 AND THEREFORE FINDING GIVEN BY US AS ABOVE WILL APPLY MUTATIS-MUT ANDIS IN THESE APPEALS ALSO. 9. IN THE RESULT THE APPEALS FILED BY THE DEPARTME NT ARE DISMISSED. ORDER PRONOUNCED ON 30 TH THIS DAY OF MARCH 2012. S D/ - S D/ - ( G. E. VEERABHADRAPPA ) ( AMIT SHUKLA ) PRESIDENT JUDICIAL MEMBER MUMBAI DT: 30.03.2012 ITA NOS : 1761 1762 & 1763/MUM/2010 M/S.N EEL SIDHI ENTERPRISES 13 COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE C.I.T. 4. CIT (A) 5. 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